On Monday, President Joe Biden announced that beginning May 14, all infrastructure projects using federal funds (specifically, Infrastructure Investment and Jobs Act dollars) will have to abide by the Build America, Buy America standards. The objective is to keep as much of the supply chain in-house as possible, from the base materials, to the manufacturing, to the labor.
As part of the infrastructure bill’s rules, iron and steel must be produced in the U.S. (this applies to products that are “predominantly iron or steel”), foreign components cannot be more than 45% of the cost of manufactured products and all construction materials must be manufactured in America.
There will be waivers available, but the waivers have specific limits and will be less available over time. The “de minimis” waiver would allow for non-domestic products to be used, up to a certain threshold. The minor components waiver will allow companies to not apply the iron and steel standard to “minor” materials, like washers and fasteners that are a small but essential part of any construction.
But the “buy American” standards will be a double-edged sword.
Biden’s Made in America initiative has added 400,230 manufacturing jobs, according to the Made in America Office. Outsourcing has been dealing blows to the American economy and middle class for the last several decades (Rust Belt, anyone?) and bringing those jobs back is essential to revitalizing former manufacturing regions.
Ensuring that products are made domestically will also help us relinquish our reliance on foreign countries. We can never become entirely disentangled from the global supply chain, but if we can reduce our economic cooperation with countries like China that have horrendous human rights abuses, we can not only better support our own people, but we stop propping up anti-democratic regimes.
The other edge of the domestic-production blade will be cost. Businesses began outsourcing so they could offer products at competitive prices while still maintaining a sizeable profit margin. American labor is expensive, especially when corporations can pay people (including children) in various Asian countries pennies to complete the same work, though not necessarily in the same conditions.
Businesses will do whatever it takes to maintain the bottom line. Since they refuse to lose any profits, they will pass the expense of higher wages and material costs to consumers. In this case, the government is the consumer, which means the taxpayer-funded infrastructure dollars won’t stretch as far.
We stand by Biden’s requirement to “build America, buy America.” The nation needs the jobs, and the world needs us to rely less on hostile countries like China. We would suggest, then, that this is an opportunity for businesses and manufacturers to prove their patriotism — take a small reduction in profits in order to provide the best products for the best prices, so America can make the most of these infrastructure funds.